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Unable to pay salaries, Afghanistan asks donors for more money

KABUL (Reuters) — Afghanistan does not have enough money to pay salaries this month and has asked aid donors for a bailout before the end of the year, the treasury chief told Reuters on Thursday.

"Salaries are our priority," Alhaj Mohammad Aqa said, explaining that teachers, civil servants and other government workers had not been paid their salaries this month.

In September, Afghanistan asked for a $537-million bailout but donors had only responded with $170 million, he said, adding that the remainder was needed because the budget for state salaries had run out.

Despite more than a decade spent on projects to boost the economy, the drawdown of foreign troops and aid donations has crippled Afghanistan's finances.

Aqa said government officials had met representatives of the United Nations and a group of about 25 donors this week to ask for the funds.

The revenue shortfall this year stood near 25 per cent of planned expenditures, he said, illustrating the severity of the budget crisis.

The deteriorating state of Afghanistan's economy is just one of the big challenges facing the new president, Ashraf Ghani, who was appointed in September.

Another priority for his administration will be dealing with a growing Taliban insurgency, that has inflicted a record number of casualties on the security forces this year.

Almost three months into his presidency, Ghani has yet to appoint a cabinet. He told donors at an Afghanistan conference in London this month it would take another few weeks to get a government in place.

The fighting and the drawdown have caused economic growth to slump to a projected 1.5 per cent this year, down from 3.7 per cent last year and an average 9.4 per cent during 2003-2012.

In Kabul, even hospitals are struggling to provide services as doctors are not being paid and some have held protests to gain attention from the government.

"Many of the doctors have not been paid for three months now because the government says there is no money to pay the salaries," said Dr Zabihullah, who works at Nur Hospital in the capital. "We can't work like this."